The Joint Venture is one of the well-liked forms of doing business in Dubai. One of the unique features of the Joint Venture is, it allows foreign entrepreneurs or companies to associate with a local company under a contractual agreement. The Joint Venture Company is also known as Contractual Venture or Consortium Company. A Joint Venture is commonly formed either contractually or through the formation of a limited liability company
A Joint Venture Company is a contractual agreement between a foreign and a local party, licensed to engage in the desired activity. The requirements to form a Joint Venture is that 51% of the local equity participation. However, the profit and loss distribution can be prescribed. One of the advantage for setting up a Joint Venture Company is that it need not be licensed from any authority and there is no need to publish the agreement. The local partner will have the business license to carry out the specified activity. The Joint Venture is suitable for companies working together on specific projects.
To set up a Joint Venture there are specific steps to be followed. The parties must set the conditions for Joint Venture and register the agreement with Department of Economic Development in Dubai and agreement must be signed before a public notary. After the drafting of the agreement must obtain initial approval from Department of Economic Development in Dubai. There are certain steps to be followed to obtain an approval from DED. They are:
- Registration and licensing of application
- Proof of reserved trade name
- Passport copy of the applicant
- No objection letter from the local partner
- Copy of the director’s passport
- Approval for the types of activity to be undertaken
- Residence permit- Foreign Applicant
After obtaining initial approval from DED, the Joint Venture is required to follow the below steps in order to get the permit for operating its activities. Below documents must be submitted with the Dubai Trade Register:
- The initial approval obtained from DED
- All documents submitted before in order to get the initial approval
- A copy of the office lease agreement along with the plot number
- A copy of the Memorandum of Association (MOA) duly authenticated by the notary public
By taking legal support from the local law firms a joint venture can be established in Dubai, which will be helpful to comply with all legal aspects in Dubai.